Morgan Stanley Adds Bajaj Finance To Focus List; Upbeat On Prospects
The brokerage says Bajaj Finance’s stock positioning is very solid, it fits the quality large cap thematic and has a tested model and good vintage
(The Corner Office Journal) -- Morgan Stanley is upbeat on Bajaj Finance Ltd.’s prospects and added the company to its Focus List, replacing Reliance Industries Ltd.
The brokerage said Bajaj Finance is one of the preferred picks of its NBFCs analyst Subramaniyan Iyer as:
=> Bajaj Finance’s stock positioning is very solid, it fits the quality large cap thematic as well as the company has a tested model and good vintage.
=> The company appears to be a good play on unsecured consumer revival with bad loan formation having shown improvement in the past two quarters.
=> Bajaj Finance has guided to lower credit cost in 4Q and if 4Q plays out as expected, it expects credit cost to be lower than 200 basis points in FY26, boosting the EPS growth outlook for FY26 to over 25%.
=> The brokerage expects loan growth and pre-provision operating profit (PPOP) growth to sustain in the vicinity of 25%, subject to macro conditions.
=> Bajaj Finance should also be a beneficiary of higher middle class disposable income following the recent Budget 2025 announcement and interest rate cuts.
=> Valuation offers upside versus history and fundamentals (return on equity and profit growth).
“Overall, we recommend large private sector financials, consumer and industrial stocks, and IT services,” Morgan Stanley said in an investor note on 10 February while making changes to its Focus List.
The brokerage removed Reliance Industries from its Focus List to accommodate the addition of Bajaj Finance.
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